Texprocil urges govt to take the edge off the high cost of export finance

Texprocil, a government constituted body for export promotion of cotton textiles submits to Finance Minister Arun Jaitley in a pre-budget memorandum lists measures which can boost exports and provide employment to over two lakh people in India especially women.

The export promotion body are looking for cut in import duty on textile machinery, continuation and enhancement of Textile Upgradation Funds Scheme (TUFS) and extending interest rate subvention of 3 percent on rupee export credit to cotton textile exporters to take the edge off the high cost of export finance.

The high interest rate subvention is making textile exports costly compared to competitors.

Interest rate on export finance in India is linked to the base rate and is, therefore very high as compared to competitors. In the case of cotton textile sector, banks normally provide working capital loan for three months stock of cotton and insist upon 25 percent margin money and the rate of interest charged is over 14 percent which puts a huge pressure on the working capital requirement of the cotton textile sector.

The Government has extended interest rate subvention of three percent on rupee export credit to exporters from certain sectors to lessen the high cost of export finance. Texprocil has urged that the same should be extended to the entire cotton textiles sector.

Texprocil has also urged the FM that the Textile Upgradation Funds Scheme (TUFS) should be extended during the blackout period from June 29, 2010 to April 27, 2011 when the scheme was suspended to all cases which have been left out for no fault of the industry.

The Indian cotton textile industry having achieved USD 15 billion in exports last year and has plans to achieve 17 percent growth in this fiscal, the industry is seeking scrapping of import duty on textile machinery and interest rate subvention of three percent which will help them to reach the target set.